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Per the RBI, the e-rupee will not only be an alternative to paper money but also an alternative to cryptocurrencies.
India’s apex bank, the Reserve Bank of India (RBI), might be a step closer to issuing its version of a Central Bank-Issued Digital Currency (CBDC). To this effect, the Reserve Bank of India has revealed its intention to begin testing the e-rupee in a limited pilot launch.
Reserve Bank of India Releases Concept Note for E-Rupee
According to a paper that was published by the RBI on Friday, the bank is looking to launch the e-rupee in phases. Called a “concept note,” the publication first explains the reason behind India’s decision to tap into the CBDC trend.
The RBI says India is following after the likes of China and about 16 other countries. All the countries are currently piloting their CBDCs. Admittedly, the paper also notes the important role of digital currencies in the evolution of currency and how it’ll change the nature of money. The RBI wrote in part:
“CBDCs are being seen as a promising invention and as the next step in the evolutionary progression of sovereign currency.”
Secondly, the paper also reveals how the RBI intends to roll out the CBDC in distinct phases. The RBI claims that there will be two versions of the CBDC. While the first will be used for retail purposes by individuals, the other version will be used for settlements between banks and corporate entities.
India Plans to Protect Citizens
Meanwhile, the RBI’s move to intensify efforts toward launching its CBDC might be in the interest of the Indian population. The bank is fully aware that the unregulated use of crypto poses high financial and economic risks. And while the government continues to struggle with regulating crypto, then the need for a CBDC becomes more justified. The RBI said in part:
“CBDCs will provide the public with [the] benefits of virtual currencies while ensuring consumer protection.”
Meanwhile, the bank insisted that CBDCs are not meant to replace paper money. Instead, they are to be implemented as an alternative form of money. Per the RBI, however, the e-rupee will also be an alternative to cryptocurrencies.